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Gibraltar Industries (ROCK) Down 12.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have lost about 12.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Gibraltar Industries, Inc. reported impressive earnings in the fourth quarter of 2022. Earnings not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. However, net sales declined from the previous year and missed the consensus mark.
Looking forward, Mr. Bosway said, “We are well prepared for what will continue to be a fluid external environment and we expect that the Residential market will return to normal demand seasonality, panel supply for the solar industry will improve in the second half of the year, and Agtech projects for produce growing will get finalized. The long-term fundamentals of our end markets remain strong, and given the progress we made in the last 12 months in our market positioning, systems, processes, and organization, we expect to drive solid performance in 2023 as we continue to execute toward our 2025 objectives.”
Inside the Headlines
Gibraltar reported adjusted earnings of 72 cents per share, which topped the Zacks Consensus Estimate of 71 by 1.4% and increased 28.6% year over year from 56 cents. This was driven by strong contributions from the Renewables and Infrastructure segments, backed by material cost alignment, field operations efficiency, price management, business mix, 80/20 initiatives and the share repurchase program. Net sales of $313.86 million lagged the consensus mark of $390.79 million by 3.2% and decreased 6.1% from the prior year’s levels of $334.45 million. On an adjusted basis, the top line declined 5.2% year over year to $312.9 million and organically by 9.8%. The decline was due to lower Residential, Renewables and Agtech businesses’ revenues. Yet, acquisition of Quality Aluminum Products (“QAP”) and demand in the Infrastructure segment aided the top line.
Segmental Details
Renewable Energy: Net sales in the segment decreased 20.8% from the year-ago quarter’s levels to $86.1 million. The backlog was down 17% year over year. Despite strong customer demand for products and services, negative impacts of the U.S. solar industry, especially on scoping and scheduling of projects, ailed the segment’s results. Adjusted operating margin of 15.2% expanded a whopping 1,390 basis points (bps) year over year and 230 bps sequentially, driven by field operations productivity, 80/20 project management, business mix and material productivity. Adjusted EBITDA margin increased 1,440 bps from the prior-year quarter’s levels to 17.9%.
Residential Products: Net sales in the segment increased 7.8% year over year to $171.9 million. Acquisition of QAP contributed 9.4% to the segment’s sales growth. Organic revenue remained challenged as the market returned to its typical lower seasonal demand patterns. Adjusted operating margins of 13.4% contracted 320 bps in the quarter. The alignment of price and material cost and the timing of changes in commodity indexes as well as QAP buyout impacted margin. Adjusted EBITDA margin fell 300 bps from the prior-year quarter’s levels to 15.1%.
Agtech: Sales declined 22.7% year over year to $38.5 million and adjusted sales fell 17.4% to $37.6 million. The downside was due to the rescoping and rescheduling of several produce-growing projects into 2023. Backlogs were down 13% from the year-ago quarter’s levels. Adjusted operating margins declined 420 bps year over year to 4.6%. Adjusted EBITDA margin was down 350 bps year over year to 7.6%.
Infrastructure: Sales in the segment rose 4.8% year over year to $17.3 million. Backlog rose 23% year over year as bidding activity continued to be very strong. The company expects the infrastructure bill to have a positive impact in 2023. Adjusted operating margins of 13.7% expanded 720 bps year over year, driven by price-material cost alignment, volume leverage, positive mix and improved operating execution. Adjusted EBITDA margin expanded 700 bps from the prior-year quarter’s tally to 18.5%.
Operating Highlights
In the reported quarter, gross profit increased to $69 million from $65.8 million reported a year ago. Adjusted operating margin expanded 190 bps year over year to 10%. Adjusted EBITDA margin also increased 240 bps from the prior year to 12.8%.
2022 Highlights
Net sales for the year came in at $1.39 billion, up 29.8% from $1.34 billion in 2021. Adjusted sales grew 4.7% to $1.38 billion. Adjusted earnings totaled $3.40, up 18.9% from $2.86 in the previous year. Adjusted operating and adjusted EBITDA margins expanded by 120 bps, each, year over year. Order backlog declined 12% from 2021.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Gibraltar had liquidity of $322 million, including cash and cash equivalents worth $17.6 million, up from $12.8 million at the 2021-end. Long-term debt was $88.8 million, up from $23.8 million as of Dec 31, 2021. In 2022, net cash provided by operating activities totaled $102.7 million versus $23.1 million in 2021. In 2022, the company repurchased 663,913 shares for $30.3 million at an average price of $45.69 per share.
2023 Guidance
Gibraltar expects revenues to be $1.36-$1.41 billion. Adjusted earnings are expected to be in the range of $3.46-$3.66 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -5.38% due to these changes.
VGM Scores
Currently, Gibraltar Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Gibraltar Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Gibraltar Industries (ROCK) Down 12.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Gibraltar Industries (ROCK - Free Report) . Shares have lost about 12.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gibraltar Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Gibraltar Q4 Earnings Top, Backlog Fall, '23 Views Strong
Gibraltar Industries, Inc. reported impressive earnings in the fourth quarter of 2022. Earnings not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. However, net sales declined from the previous year and missed the consensus mark.
Looking forward, Mr. Bosway said, “We are well prepared for what will continue to be a fluid external environment and we expect that the Residential market will return to normal demand seasonality, panel supply for the solar industry will improve in the second half of the year, and Agtech projects for produce growing will get finalized. The long-term fundamentals of our end markets remain strong, and given the progress we made in the last 12 months in our market positioning, systems, processes, and organization, we expect to drive solid performance in 2023 as we continue to execute toward our 2025 objectives.”
Inside the Headlines
Gibraltar reported adjusted earnings of 72 cents per share, which topped the Zacks Consensus Estimate of 71 by 1.4% and increased 28.6% year over year from 56 cents. This was driven by strong contributions from the Renewables and Infrastructure segments, backed by material cost alignment, field operations efficiency, price management, business mix, 80/20 initiatives and the share repurchase program. Net sales of $313.86 million lagged the consensus mark of $390.79 million by 3.2% and decreased 6.1% from the prior year’s levels of $334.45 million. On an adjusted basis, the top line declined 5.2% year over year to $312.9 million and organically by 9.8%. The decline was due to lower Residential, Renewables and Agtech businesses’ revenues. Yet, acquisition of Quality Aluminum Products (“QAP”) and demand in the Infrastructure segment aided the top line.
Segmental Details
Renewable Energy: Net sales in the segment decreased 20.8% from the year-ago quarter’s levels to $86.1 million. The backlog was down 17% year over year. Despite strong customer demand for products and services, negative impacts of the U.S. solar industry, especially on scoping and scheduling of projects, ailed the segment’s results. Adjusted operating margin of 15.2% expanded a whopping 1,390 basis points (bps) year over year and 230 bps sequentially, driven by field operations productivity, 80/20 project management, business mix and material productivity. Adjusted EBITDA margin increased 1,440 bps from the prior-year quarter’s levels to 17.9%.
Residential Products: Net sales in the segment increased 7.8% year over year to $171.9 million. Acquisition of QAP contributed 9.4% to the segment’s sales growth. Organic revenue remained challenged as the market returned to its typical lower seasonal demand patterns. Adjusted operating margins of 13.4% contracted 320 bps in the quarter. The alignment of price and material cost and the timing of changes in commodity indexes as well as QAP buyout impacted margin. Adjusted EBITDA margin fell 300 bps from the prior-year quarter’s levels to 15.1%.
Agtech: Sales declined 22.7% year over year to $38.5 million and adjusted sales fell 17.4% to $37.6 million. The downside was due to the rescoping and rescheduling of several produce-growing projects into 2023. Backlogs were down 13% from the year-ago quarter’s levels. Adjusted operating margins declined 420 bps year over year to 4.6%. Adjusted EBITDA margin was down 350 bps year over year to 7.6%.
Infrastructure: Sales in the segment rose 4.8% year over year to $17.3 million. Backlog rose 23% year over year as bidding activity continued to be very strong. The company expects the infrastructure bill to have a positive impact in 2023. Adjusted operating margins of 13.7% expanded 720 bps year over year, driven by price-material cost alignment, volume leverage, positive mix and improved operating execution. Adjusted EBITDA margin expanded 700 bps from the prior-year quarter’s tally to 18.5%.
Operating Highlights
In the reported quarter, gross profit increased to $69 million from $65.8 million reported a year ago. Adjusted operating margin expanded 190 bps year over year to 10%. Adjusted EBITDA margin also increased 240 bps from the prior year to 12.8%.
2022 Highlights
Net sales for the year came in at $1.39 billion, up 29.8% from $1.34 billion in 2021. Adjusted sales grew 4.7% to $1.38 billion. Adjusted earnings totaled $3.40, up 18.9% from $2.86 in the previous year. Adjusted operating and adjusted EBITDA margins expanded by 120 bps, each, year over year. Order backlog declined 12% from 2021.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Gibraltar had liquidity of $322 million, including cash and cash equivalents worth $17.6 million, up from $12.8 million at the 2021-end. Long-term debt was $88.8 million, up from $23.8 million as of Dec 31, 2021. In 2022, net cash provided by operating activities totaled $102.7 million versus $23.1 million in 2021. In 2022, the company repurchased 663,913 shares for $30.3 million at an average price of $45.69 per share.
2023 Guidance
Gibraltar expects revenues to be $1.36-$1.41 billion. Adjusted earnings are expected to be in the range of $3.46-$3.66 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -5.38% due to these changes.
VGM Scores
Currently, Gibraltar Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Gibraltar Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.